An analyst cuts Kalyan Jewellers share price target after the stock falls 45% from peak

Global brokerage firm Citi recommends investors to ‘Buy’ shares of Kalyan Jewellers India Ltd. after its December quarter results. However, it has cut its price target on the stock by 20% to ₹650 from ₹810 per share.

Shares of Kalyan Jewellers are down 43% so far this year. The stock had already corrected 45% from its peak of ₹795.40, which it hit on January 2, 2025. The revised price target from Citi implies a potential upside of 47% from current levels.

The brokerage wrote in its note that Kalyan Jewellers’ revenue grew by 40% year-on-year, with a 24% same-store sales growth (SSSG) in India, which was broadly in-line with expectations.

The company’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) and Profit Before Tax (PBT) grew by 19% and 23% year-on-year, respectively, although they were slightly below Citi’s estimates (-1% and +6%, respectively).After adjusting for a ₹54.8 crore customs duty impact, EBITDA and PBT grew by 33% and 46% year-on-year.

The company’s management highlighted the following—

(a) Demand trend continues to remain strong despite recent run-up in gold prices.
(b) Solitaire diamonds account for 5-6% of total diamond revenue and around 1% of total revenue.(c) Gross margins at the store level are stable.

(d) The company has repaid approximately ₹450 crore in debt over the past 1.5 years and expects to repay an additional ₹150 crore in the fourth quarter of FY25.

(e) The company expects to add 30 Kalyan stores in India during the fourth quarter of FY25, and 90 stores in FY26, with Letters of Intent (LOIs) already signed for expansions planned until the first half of FY26.

(f) Franchise revenue share was approximately 40% in the third quarter, compared to around 32% in the second quarter.

(g) The company expects PBT growth to be higher than revenue growth in FY26, led by lower interest cost and operating leverage in employee expense and ad expense.

Out of the nine analysts who have coverage on Kalyan Jewellers, eight of them have a ‘Buy’ rating, while one of them has a ‘Sell’ rating on the stock. Motilal Oswal has the highest target price on the stock at ₹875, while Ventura Securities’ ‘Sell’ rating, comes with a target of ₹692.

The company’s promoters held a 62.85% stake as of December 2024 quarter, according to data from BSE.

Shares of Kalyan Jewellers settled 1.27% lower on Thursday at ₹443. The stock has gained nearly 27% over the last 12 months.